China stocks rose sharply on Thursday morning, as market appears to have shrugged off Moody’s downgrade of China’s credit rating. Other Asian markets also rose as traders welcomed indications from the Federal Reserve that interest rates could rise next month, while oil prices rallied ahead of an expected extension to output cuts.

Moody's slashed China's credit rating for the first time in almost three decades citing concerns about the country's rising debt and slowing growth, but Beijing rejected the downgrade as "inappropriate". (AFP)

China stocks rose sharply on Thursday morning, as market appeared to have shrugged off Moody’s downgrade of China’s credit rating. The rating cut was followed by criticism from senior government officials in Beijing.

Other Asian markets also rose as traders welcomed indications from the Federal Reserve that interest rates could rise next month and oil prices rallied ahead of an OPEC meeting.

Minutes from the Fed’s May policy meeting showed board members thought that if jobs growth remains healthy with a rebound in investment and consumer spending then rates could rise soon, which many took to mean June.

While the economy has shown some signs of weakness, the bank still thinks its broad strength would justify winding down its balance sheet, essentially sucking cash out of the system and putting upward pressure on borrowing costs.

India’s benchmark BSE Sensex also rebounded 123 points in early trade on fresh buying by investors, tracking a firm trend in other Asian bourses.

The 30-share index, which had lost 269.33 points in the previous two sessions, rose in early trade on Thursday.

On Thursday the Nikkei in Tokyo ended the morning session 0.5% higher.

Seoul jumped one percent to a fresh record high after the South Korean central bank kept interest rates on hold citing an improving economy. Singapore, Taipei and Wellington also posted gains.

Traders are now looking ahead to OPEC’s Thursday meeting, in which the producers along with Russia are expected to announce an extension the output cut.

The agreement -- which came into force on January 1 -- sent prices surging when it was unveiled in November in a bid to address a global supply glut.